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WASHINGTON – CUNA, as promised, has sent off a letter to Federal Reserve Gov. Edward Gramlich urging the agency to amend its “Truth in Lending” Reg Z rules to require auto manufacturers to disclose more information to consumers in 0%, or other below market rate financing offers. “When automobile finance companies offer APRs at or near 0%, it is clear that this financing is being offered at a rate that is below the market rate and is also below the companies’ cost of funds.It is unrealistic for consumers to expect that they are actually borrowing money below the cost of funds,” CUNA President/CEO Dan Mica wrote. If a consumer winds up paying for the low APR by giving up the rebate offer alternative to 0% financing deals, that is a prepaid finance change that should be disclosed under Reg Z, Mica stated Citing a recent U.S. District Court of Northern Illinois case in which a judge ruled in favor of a consumer and against a dealership. Mica said the case confirmed CUNA’s argument that the below-market rate financing needs to be disclosed. Amending Reg Z rules “will further the goal of TILA by providing consumers with meaningful comparisons of interest rates so that they can make informed credit decisions,” Mica wrote. “We believe that a relatively simple disclosure requirement should be included in Regulation Z to reflect that purchasers may be paying a higher price for the automobile if they decide to accept below market rate financing,” he stated. CUNA offered its assistance to the Fed to provide the disclosure.

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